Articles taken from "The VOICE" August 1999

The VOICE
August 1999
Vol. 35 No. 4

Presidents Message

This is my last Presidents message to all of you, as I will step down and let Jackie Lippe from West Bend take over the role of president. It has been a very busy year for most of us, and I myself can't wait until January 1, 2000 is behind us so we can get on with other things that need fixing.

Over the past year we have seen the Medical Assistance Program in the state take a few turns, maybe for the worse. They have tried to implement the swipe cards, which has been delayed twice now. The dial up system is giving us less information than we have had in the past, so this will make our lives more interesting. Badger care is here, and we will have more issues to deal with as that program evolves. I wish everyone good luck with these changes, and remember you have a whole organization to help you, so don't try to do it all yourself

There is an interesting case taking place in the state regarding the Lien law. It involves a hospital that is being sued because they filed a lien in an accident case, but an HMO covered the patient. If the judge rules in favor of the patient there may be some changes that hospitals will need to do with their policies regarding the filing of a lien.

I hope to see all of you at the Landmark in Door County for our annual institute August 18-20. If I don't see you there then hopefully we will see you at our quarterly meetings the second Friday in October, December, February or May.

Steve Marg

President WMCA

Liening Too Close To The Edge: Violating The Hospital Lien
Statute Can Lead To Serious Consequences

By: von Briesen, Purtell & Roper, S. C. Contact: Scott Andrew Farrow, (414) 287-1262; e-mail: sfarrow@vonbriesen.com

The Wisconsin Court of Appeals ruled recently that a hospital could not file a hospital lien against an injured HMO patients liability insurance settlement because, under her health insurance contract, the patient was not obligated to pay for the hospitalization. In the process, the court deter mined that the patient was entitled to a trial on a number of claims against the hospital - including fraud, violation of the Wisconsin Consumer Act, breach of contract and racketeering - which a lower court had dismissed. The court also let stand a claim for punitive damages and approved the lower court's ruling that found the hospital liable for conversion and tortious interference with contract

Dorr v. Sacred Heart Hospital, No. 98-1772 (Ct. App. May 25, 1999), may be of significance to health care providers that file hospital liens against liability insurance settlements. The case sends an unsettling message about how far a hospital may go in maximizing reimbursement for services provided to HMO patients.

Background of the Case

In Dorr, Beverly Dorr was involved in an automobile accident that resulted in two hospitalizations at Sacred Heart. She provided the hospital documentation indicating that she had health insurance through Group Health Cooperative of Eau Claire, a local HMO that would pay all of the expenses associated with her care. The hospital had a Provider Agreement with the HMO with per diem rates for care provided to persons enrolled in the HMO. Although the hospital's charges for Ms. Dorr's care totaled $27, 051.65, under the perdiem rates in the Provider Agreement the hospital could bill the HMO only $17,618.

The Provider Agreement also contained a "Hold Harmless" provision under which the hospital agreed it would not bill or attempt to hold a Group Health subscriber responsible for the costs of care provided under the Agreement. In stead, the hospital agreed to accept the per diem rates specified in the Provider Agreement as full payment for such care. The hospital also agreed that it would not exercise a right to opt out of the statutory immunity afforded HMO patients from liability for the costs of care covered by an HMO insurer.

The hospital did not bill the HMO for the expenses of Ms. Dorr's care. Rather, it placed a lien on the proceeds of the liability insurance policy of the other driver involved in the accident, in the full amount of its charges. The Dorrs claimed the lien was improper and demanded unsuccessfully that the hospital withdraw it. Ultimately, the liability insurer paid $27,051.65 to the hospital and the rest of its policy limits - $22, 948.35 - to the Dorrs.

The Dorrs then sued the hospital alleging that filing the hospital lien violated the Provider Agreement and the statutory immunity of HMO Patients. The Dorrs claimed that, as a result, the hospital had committed conversion. tortious interference with contractual relations, fraud, unfair debt collection practices, breach of contract, racketeering activity, and conduct that warranted an award of punitive damages. The trial court

determined that the hospital had converted the Dorr's insurance settlement, and had tortiously interfered with their agreement with the HMO by refusing to bill the HMO for the expense of Ms. Dorr's hospitalizations. The trial court dismissed all of the Dorr's other claims. The Dorrs and the hospital both appealed these determinations, leading to the court of appeals' decision.

Rationales and Consequences

The Dorrs premised all of their claims on the alleged wrongful nature of the lien that the hospital placed on the Dorrs' liability settlement. The central issue on appeal, therefore, was whether the lien was proper. The rationale for the courts resolution of this issue may help other providers avoid the consequences that befell the hospital.

The court first reviewed the language of the hospital lien statute and ruled that in order to file a hospital lien, there must be a debt, and the debt must be owed by the person who received the medical services from the hospital. The court determined, however, that no debt exists when the patient is an HMO subscriber who is statutorily immune from liability for care that is covered by the HMO and the health care provider has not opted out of such immunity in the manner provided by statute. The court also deter mined that no debt exists when a contract between the insurer and the health care provider indicates that the provider would not bill or attempt to hold the HMO sub scriber liable for the cost of care covered by the HMO. The court concluded that the Dorrs did not owe the hospital a debt, and the hospital ' s only recourse was against the HMO.

The court also determined that the "Hold Harmless" provision in the Hospital/HMO Provider Agreement negated the existence of any debt owed by the Dorrs to the hospital. Accordingly, the hospital lacked legal authority for the lien it placed on the proceeds of the Dorrs' settlement.

Having concluded that the hospital lien was improper, the court then reviewed and reinstated a claim that the hospital made false representations to the public in a commercial setting. The court ruled that a reasonable jury could find false representations in the hospital's violation of the "Hold Harmless" provision of the Provider Agreement, and its violation of its agreement to be bound by the HMO immunity statute. In addition, the court ruled that the trial court dismissed prematurely the Dorrs' claim of unfair debt collection practices. The court also held that the hospital breached the "Hold Harmless" provision of the Provider Agreement, which the court found was included in the contract expressly for the benefit of HMO subscribers. The court therefore reinstated the Dorrs' breach of contract claim as well.

The court next reinstated the Dorrs' claim that the hospital had engaged in racketeering activity. The court identified evidence of the "criminal intent" necessary to support this claim that it said the trial court overlooked, including the following:

The court also reinstated the Dorrs' claim for punitive dam ages, concluding that there was "ample evidence" for a jury to consider whether the hospital acted in intentional disregard of the Dorrs' rights. The court repeated the above facts, and stated that the hospital filed the lien as "purely a ploy to try to get as much money as possible."

Finally, the court also approved the trial court's rulings that the hospital had converted the Dorrs' insurance settlement, and that the hospital had tortiously interfered with the Dorrs' HMO agreement by failing to bill the HMO for the cost of Ms. Dorr's hospitalizations, thereby preventing the HMO from fulfilling its contractual obligations to the Dorrs.

Lessons to be learned from Dorr

In the aftermath of the court's decision, hospitals should approach the use of hospital liens with care. Steps worth taking include:

state of Wisconsin

Share your experiences! A wedding? A significant Anniversary?
A Birthday? A job change? An unusual vacation?
A new baby? An unusual experience? A promotion? Commentary!
Are any of these events going on in your life or of anyone we know?
Call Bud Brauer at (414) 964-6040
E-mail: feenix@execpc.com

Congratulations!
There are constant reminders of the passage of time and yet one more has been brought to my attention.

Congratulations to Sue Becker Hargraves and Bob on their new role as grandparents. Besides traveling to Iowa and Colorado to visit the little ones, Sue has become a garage sale junky.

And congratulations also go to Linda Krish, the newly appointed Director of Patient Accounts at Froedtert Memorial Lutheran Hospital. Linda was formerly with Holy Family Memorial in Manitowoc where she served as their Director of Patient Financial Services for more than 20 years. Best wishes for success!

Collections Unlimited, Inc. has recently welcomed Kenlyn Gretz as Collection Manager and Dave Melville as Sales Representative. While on the subject of CUI, those of you who are old like me will remember Roger Gaffner. Roger, who joined CUI in Green Bay 19 years ago, has moved on. In the Chicago area for the past ten plus years, he will be relocating to Texas in the near future to pursue other business interests.

Cash Flow Problems?
Ever wonder where your money goes? The results of an American Express survey published in ACA's Credalert, May, l999 has the answer. The American Express Every Day Spending Index released last February shows the following:

Utilities including cable and telephone 6,228
Food (groceries $3,240/fast food $720) 3,960
Taxes 5,378
Educational Expenses 3,460
Auto, Home, Medical Insurance 2,722
Gasoline 1,044
Charity 1,023
Home Furnishings 1,008
Health Care 884
Drug Store (health and beauty) 672
Total Annual Household Expense $26,379

Intertainment
Some food for thought found on the Internet...

"A bus station is where a bus stops. A train station is where a train stops. On my desk, I have a work station. .. "

"I was thinking about how people seem to read the Bible a whole lot more as they get older. Then it dawned on me... they were cramming for their finals."

"If it's true that we are here to help others, then what exactly are the "others" for?"

"Go ahead and take risks...just be sure that everything will turn out okay."

"If you can't be kind, at least have the decency to be vague."

Personally Speaking
Congratulations to daughter Kari Brauer who was married to Tim Nau on July 3rd in Milwaukee. It's not that we lost a daughter; we gained a garage!

And on the occasion of Mary's and my recent 60th birth days, I offer the following:

Prayer for Senility

God grant me the senility to forget the people

I never liked anyway;

the good fortune to run into the ones I do;

and the eyesight to tell the difference!

Author Unknown

 

Providers Who Flunk The Customer Service Test Will Take A Financial Hit

By David Zimmerman

A physicianwasrecentlyconfrontedbya40-year-oldfemale patient detailing the mistakes that the physician's office staff had made. The doctor responded, "Well, you can go somewhere else if you want to." This scenario exemplifies the attitudes of many health care providers regarding customer service.

When we asked this patient what aspects of customer service from a healthcare provider were important to her, she answered, "I expect them to see me as a person ... that they use my name, look at me, and show a certain amount of empathy. I also expect a sense of personal service regarding the bills and the reduction in long delay times." These are certainly not unrealistic expectations for patients to have from their healthcare provider. However, patients say their expectations are not being met.

The revolution for improved customer service by healthcare providers has begun. For years, Americans have told opinion pollsters that they felt disenchanted, disenfranchised, and alienated from healthcare providers. Every available study indicates that patients no longer view providers as "angels of mercy."

Customer service will impact revenue
Customer service, in my opinion, long given a low priority by providers, now becomes so important that it can affect their cash flow and revenue.

Providers who flunk the customer service test will lose patients. It won't be a few disgruntled patients who take their business some where else because of the poor service they received from the provider - it will be large numbers of patients taken away through the managed care network. They will turn to the provider who knows what customer service is all about and can provide it successfully.

Customer service has indeed become the new battlefield for providers in this day of the new paradigm in healthcare delivery. Cost control and excellent customer service will go hand-in-hand. And make no mistake about it: Patients and their families are the customers for providers. Customers are no longer the medical staff, or payers for hospitals or payers for physicians, but the people receiving the care or their relatives.

Amazingly, our surveys reveal that six percent of the patients who responded said the customer service aspect was so bad they would not return to that hospital, and eight percent said they would tell the world how badly they were treated so others would not be faced with the same "~ or service and humiliation." "Lack of human respect," was a complaint they often reiterated.

Insurrection against indifference
So it would seem this dispassionate indifference has created such impassioned hostility among its customers patients - that they are rising up in mock revolt. The man aged care phenomenon has allowed the public to rise up in mass and organize what one might call an insurrection against indifference.

And that undeniable insurrection will impact income to the providers, generally more or less of it depending how the provider reacts to the demands for better customer service. The provider who understands that will survive. The ones who do not, will not.

Our research reveals employees are moving swiftly toward making quality and patient satisfaction decisive issues. Managed care organizations will be their carriers of justice. And justice will be served. Customer service in the healthcare industry will become the new buzzword. Cost control is a given. How patients are treated is the new frontier.

Our findings also lead us to conclude that the vast majority of providers are not paying attention to the omens. Most don't hear the discontented masses forming outside their doors. They don't seem to sense the coming together of a disgruntled public and a willing majority of employers to create this crescendo of change.

What sets providers apart today is service
Providers have to face up to the negative image many Americans have of their healthcare service, then do something about it. Hospitals and medical groups can no longer compete on the strength of their clinical expertise alone because the industry is having to react to competition that can and will provide the care for less cost. What sets providers apart today is the success of their "service" efforts.

More and more, the service and patient relations context that surrounds the medical care given will give providers added value and will differentiate them from the competition. Patients are up in arms, believing that they are treated with a lack of dignity, respect, and compassion. They are mad, and now that they can voice their displeasure, their anger will hit providers at the bottom line. Future business in the form of patient volume will swing in the balance, based on a great deal on provider customer service.

It's a new battlefield that providers themselves have created by their apathy toward customer service. Dissatisfaction has been festering in patients' minds for a long time, fueling the revolt for improved customer service. And today patients are leading it.

AUTHOR
David Zimmerman is chairman and CEO of his own healthcare receivables consulting group, Zimmerman & Associates, for the past twelve years in Milwaukee, Wisconsin. He is also the author of ten diverse books including his most recent effort, Unleash the Potential, Unlocking the Mystery of Motivation.

Mr. Zimmerman has become one of the most respected and sought-after speakers in the healthcare industry. His commitments to excellence and knowledge of receivables are the threads that link his work as speaker and author. He is quoted regularly in a wide variety of newsletters and national trade magazines and has been interviewed numerous times on television and radio.

Appellate Court Decision - Dorr v. Sacred Heart - Eau Claire Hospital Lien/HMO "Hold Harmless" Case

By: Tim Hartin, WHA General Counsel

INTRODUCTION
This case involves the statutory right of hospitals to file a lien to protect their right to payment. The hospital lien arises when services are rendered to a person who has been injured as a result of negligent or wrongful conduct, and attaches to the proceeds of any damage award or settlement received by the injured party.1 However, HMO patients enjoy the protections of the hold harmless or immunity provisions in the HMO statutes, which limit recourse to patients covered by HMOs.2

On May 25, the Wisconsin Court of Appeals ruled that the HMO hold harmless statute prohibits the filing of a hospital lien by a hospital against a patient covered by that HMO, concluding that such patients do not owe any debt, and that a debt is a prerequisite to any lien.

BACKGROUND
Sacred Heart - Eau Claire treated Beverly Dorr after her automobile accident in 1997. Sacred Heart filed a lien against any insurance settlement. The other driver's insurance company paid out its policy limits of $50,000 and sent approximately $27,000 to Sacred Heart to satisfy the lien.

Ms. Dorr was covered by Group Health Cooperative HMO of Eau Claire. Sacred Heart elected not to bill the HMO, under its policy of seeking recovery from liability insurers in accident cases and in order to receive 100% payment rather than the discounted HMO payment. However, Wisconsin law provides that an HMO patient can not be held liable for the health care costs covered by their HMO, and prohibits any attempt to recover such costs by anyone who provides the services covered by the HMO.3

Ms. Dorr has sued Sacred Heart to recover the $27,000 paid to Sacred Heart to settle the hospital lien, arguing that the HMO "hold harmless" or immunity statute prohibits a hospital from attaching a lien to the insurance proceeds pay able to a patient covered by an HMO. The trial court decided in her favor on this issue, ruling that the HMO immunity statute overrode the hospital lien statute.

Ms. Dorr also brought a variety of other claims, including a claim that, by pursuing the lien, the hospital had engaged in racketeering, committed fraudulent commercial misrepresentations, violated her rights as a third-party beneficiary to the HMO contract, and engaged in unfair debt collection practices. Ms. Dorr also asked for punitive damages. The trial court dismissed these additional claims.

Court of Appeals Decision
The appeals court ruled against the hospital on all counts. The appeals court upheld the trial court's determination that hospitals may not file statutory hospital liens against HMO patients, on the grounds that such patients do not incur the underlying debt necessary to support the lien. The court concluded that the HMO hold harmless statute, as well as hold harmless provisions in the HMO contract, meant that Ms. Dorr incurred no debt owing the hospital for her care. Without such a debt, the court reasoned, there could be no lien.

The appeals court also ruled that the patient could bring a wide variety of other claims against the hospital. The court ruled that:

The case has been remanded for trial.

Conclusion and Recommendations
The appellate decision in the Dorr case, if it stands, would prohibit hospitals from filing statutory hospital liens against patients for services that are insured by an HMO. Further, the decision clears the way for an HMO patient to bring a wide variety of ancillary claims, up to and including racketeering claims, against a hospital that files a hospital lien.

The Dorr decisions is a reported decision, meaning that it is intended to stand as precedent for other courts to follow. In view of this decision, hospitals should revisit their policies on hospital liens and determine whether they should stop filing liens against HMO patients.

A link to the Dorr decision will be posted on the WHA website, or members can request hard copies from Roberta Riddle at WHA, 608/274-1820, or email rriddle@wha.org.

1§ 779.80, Wis. Stats.
2§ 609.91, Wis. Stats.
The HMO immunity statue applies to all health care provided by a hospital that has not elected to be exempt from the immunity statute, provided that the care is "covered under a policy or certificate issued by the [HMO]." § 609.91 (1) and (1) (b). The statue clearly applies to participating providers in the HMO, and would appear to apply to nonparticipating providers as well who provide care that is covered by the HMO.

The Three P's of Productivity

Your meetings will be more productive if everyone involved knows these three P's before the meeting begins:

Note: You can even apply the three P's to agenda topics by answering these questions: What's the purpose of this topic? What process will we use to discuss it? What payoff can we expect from the discussion?

Source: Team Think: How to Make Good, Smart, Quick Decisions in Any Meeting, by Ava S. Butler, McGraw-Hill, 11 W. l9th St., New York, NY 10011.

Annual Renewal

by Joan Carr

Every year we have a wonderful chance for renewal at our Annual Institute this year in Door County. In addition to the excellent physical surroundings, mental renewal will be attended to as well. To that end. I will depart from my usual writings on the many mysteries of Medicare and share with you some of the more interesting stories that have come my way over the past year. My personal belief is that sometimes life comes down to two choices only - go crazy or have a sense of humor. I always prefer to opt for the latter, so consider this my contribution to your renewal:

FACT: HCFA Program MemorandumA98-37 states that ear piercing is allowed in Skilled Nursing Facilities.

FACT: The clinical abbreviation "PT" can mean: physical therapy, proficiency testing, or patient (depending on the specialty of the clinician you are talking to) . Other interesting acronyms and abbreviations: CYA - conserving your assets, 'down' arrow + B.S. - low blood sugar (does this mean if somebody tells you are full of BS you are hyperglycemic?)

STORY: In Dallas I gave a seminar at the same time the Mary Kay convention was in town and met a Rep who used to do Medicare billing. She made the career change be cause of the frustration. She won a "cherry red" Grand Am for her success - she sells Mary Kay in Alaska where it's dark 6 months at a time - Who would see makeup?

OBSERVATION: One of the leading errors Social Security makes when they put beneficiaries into the Medicare Program is a mismatch of the name and gender. We also live in an age where people have choices in change of gender. As these people age, one can only wonder what Medicare's Common Working File will do with this information.

CHALLENGE: Try saying "hypodermoclysis" real fast, 3 times. Can you do it? Do you know what this is? (If not, ask me in August)

FACT: The name of Medicare's statistical software is Artificial Intelligence.

STORY: There is a lady in New England with a background in materials management who took a job as Medicare biller for a Skilled Nursing Facility and found her predecessor had not billed for 9 months. She said this experience gives her new meaning to the word "inventory".

STORY: A Director of Patient Accounts had over 3,000 claims suspended by Medicare with requests for documentation. Her software vendor had a bug, which added extraneous numbers to the Value Codes on her UB-92s. (After she identified the error, she was able to get Medicare to process her claims correctly).

STORY: A longtime biller in the Midwest is making a career change after 25+ years. She is going to be a manager at a fast food place - "more money and no Fiscal Intermediary" her words.

STORY: A well-meaning employee in a West Coast business office was reorganizing the files and accidentally threw away some patient records that had not been retained for 7 years. Two months later Medicare did a Focused Medical Review & asked for files. You guessed it - 80% of the files requested were the ones thrown away (thank goodness for electronic storage!).

FACT: A studying 1995 determined that 44% of patients pay their cable TV bills before their medical bills - maybe if the Hospitals bought the cable companies & threatened to turn off the cable when the hospital bill payment was late????

FACT: Doctors in Florida are revolting against managed care and disenrolling themselves from HMO's. If a majority of doctors pull out of managed care contracts will the acronym HMO mean something new - like Hopelessly Mangled Opportunity?

FACT: HCFA and the AMA are working closely to develop E & M guidelines, which are "user friendly" for physicians. The goal is to support timeliness & accuracy in documentation. What about legibility? By the way, did you ever hear of a doctor having carpal tunnel syndrome? (Maybe if we all wrote like doctors..)

Last, but certainly not least is the CFO in San Francisco who wanted to know if the gift shop (at the hotel where I presented my seminar) sold PROZAC. His belief was that the use of the drug would probably make HCFA information more understandable!

Research has shown that humor IS good for the soul. Some times true stories can be the most humorous and, if nothing else, we know we are not alone dealing with the daily frustrations in healthcare. Take a minute, laugh a little save your sanity.

Statements To Calm Conflict

Try using approaches such as these to regain control when a dispute threatens to disrupt a meeting you're leading:

Source: The Secretary's Secret Weapon: Arm Yourself for Success With Seven Essential Communication Skills, by Bobbi Linkemer, AMACOM, 1601 Broadway, New York, NY10019.

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